Understanding (and Questioning) Leslie’s Law

By Siddharth Singh, 20th July, 2015

Mark Leslie teaches courses on Entrepreneurship, Ethics, and Sales Organization at the Stanford Graduate School of Business. In a piece in Insights by Stanford Business, he explains something called the ‘Leslie’s Law’. The law refers to technological start-ups disrupting and eating away the market of established companies. The law is, “…when small meets large, small almost always wins…”

He explains:

“When a sleek, small player enters the market, it does so by creating a low-friction, high-fit product that is sold at a low price to a large market. These new products are sold to a portion of the market that cannot access the larger products due to the cost of entry (in dollars and complexity) and the cost of ownership. The larger company may not even notice that the new company has entered the market because there are no mano-a-mano customer confrontations.

This leaves the smaller company free to expand upward into the market. Its leading-edge customers whose needs are expanding, and its own interest in expanding its market upward, spurs it on to increase the features and functionality of its products. From the perspective of the large incumbent companies, this upward migration is imperceptible. They aren’t worried, so they don’t pay attention to it. But it’s happening.

Inevitably, by the time the threat becomes compelling, it’s too late.”

Fair enough. This explanation charts out the progress of start-ups quite well. The article carries a simple representative diagram that explains how new entrants “chew their way up” the market share. The article is peppered with illustrations of this process.

But there are two things here that I wish point out.

One, Mark Leslie says, “…when small meets large, small almost always wins…” (emphasis mine). Almost always? In the absence of a proper definition of what constitutes “meets” and the Law itself, “almost always” seems like a gross exaggeration.

Two, did Mark Leslie just name an observation — or a “law” — after himself? Because the only other result I found on a Google search of “Leslie’s Law” was of an equestrian Olympic medal winner named Leslie Law. I’d be happy to be corrected on this, but I don’t think this is how we go about naming laws.

The author is on Twitter @Siddharth3